Carney is accused of misleading Canadians about the country’s finances
Episode Stats
Words per minute
183.59796
Summary
In this episode, we take a deep dive into the difference between an operating and capital deficit, and why the Liberal government is confusing us with a new accounting system for federal spending. We also discuss the impact of the Bank of Canada's recent budget, and how it may have changed the way we account for federal government spending.
Transcript
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Okay, let's switch over then and start talking about Mark Carney's budget, because one of the
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things that you just mentioned is this kind of sleight of hand that seems to be taking place
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with the difference between a capital deficit or a capital budget and operational budget.
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And so, you know, typically you would assume that, you know, operations is the day-to-day
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spending of the government, and then the capital spending is investments in the future. And somehow
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in mark carney's costed platform uh budget he sort of increased the number of things that you could
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typically uh discuss uh describe as being investments in the country and so that that
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was sort of a way that he could say that he you know he's not racking up as much deficit as
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possible could you help us understand like what what he did and why is that allowed like how is
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it that a prime minister could just like change the way that we account of our federal spending
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Well, first of all, the federal government and all the provinces have adopted capital
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budgeting for a long time now. And in fact, you calculate an operating budget where you subtract
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off from the revenues received and all the costs of running the government, including depreciation
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costs on capital. And then you might have a capital budget that you report the capital,
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and then as it depreciates you you know provide a stock but uh that's been done you know by the
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provinces and and the federal government for for some time but there's always this issue about what
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you call capital and if you put money into a bunch of funds uh that uh may not be spent until later
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time you're not necessarily creating capital uh or at least not much capital and and so it's very
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confusing actually uh in terms of what is being called capital uh in without further explanation
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coming from the liberal party and so when i look at all this so-called capital expenditure it looks
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like to me it's just a bunch of money to be put aside to be spent in the future in fact they talk
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about you know cash costs versus accrual accounting and it does sound like they're
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they're naming a lot of things as capital but it's not clear it really is capital